Biotech billionaire Patrick Soon-Shiong’s Culver City company NantHealth Inc. faced a plummeting share price last week when a news report suggested L.A.’s wealthiest person may have used a major philanthropic donation to benefit the business.
Stat, a news group affiliated with the Boston Globe, reported on March 6 that Soon-Shiong made a $12 million donation to the University of Utah for genetic research into rare diseases in 2014, but the university later paid $10 million of that amount to NantHealth to conduct genetic sequencing, raising questions about Soon-Shiong’s motivations in making the donation.
NantHealth shares plunged following the report, falling to $5.50 at the close of trading on March 6 from $7.14 that morning. The price fell further in subsequent days, closing at $4.64 on March 8, a drop of 35 percent since the beginning of the week. Shares of NantKwest, another Soon-Shiong company in Culver City, also fell, losing 14.4 percent for the trading week ended March 8. (See page 32.)
Soon-Shiong could not be reached for comment. His spokeswoman, Jen Hodson, offered the following prepared statement:
“The Chan Soon-Shiong family foundation made a gift of $12 million to the University of Utah. The gift agreement was fully vetted by attorneys on both sides and did not dictate that the University had to use NantHealth’s platform, but instead allowed the University to choose any provider who could meet the timeframe and clinically validated standards of a whole genome, transcriptome assay.”
NantHealth reportedly told investors last November that the company received 524 orders for one of its products, the genetic test GPA Cancer, over the previous three months. Investors were informed one third of those orders came from the University of Utah.
A spokeswoman for the university said in an emailed statement: “The University believes the Soon-Shiong Foundations delivered on commitments to the University. The quality of the research exceeded expectations and benefitted scientific discovery. It is not the University’s role to advise the Soon-Shiong Foundations or NantHealth on the tax consequences of these transactions.”
Soon-Shiong called questions about his intent “maliciously false” in an interview with the Los Angeles Times and said his foundations made the donation “out of a desire to make this knowledge available to scientists throughout the world.”
Soon-Shiong, NantHealth’s chairman and chief executive, also said he was “befuddled by any other motivation that could be perceived.”
Media strategist Erik Deutsch, a principal of L.A.’s ExcelPR Group who has represented biotech and medical clients for 20 years, said Soon-Shiong made his situation worse by calling news reports “maliciously false” rather than addressing the legitimate questions raised by the situation.
“If he doesn’t acknowledge that there is a perception problem, it can descend into a situation, to use colorful language, where he is perceived as a purveyor of alternative facts, and nobody wants to wear that scarlet letter,” Deutsch said.
Soon-Shiong ranked No. 1 on the Business Journal’s list of Wealthiest Angelenos in 2016 with a net worth of $15.4 billion.
